Tuvalu’s well-managed Tuvalu Trust Fund, which invested in major economies and funded a significant part of the government budget, started 2007 in good shape, but the fund was likely to suffer from global credit problems that emerged late in the year. Income from the lease of the country’s “.tv” Internet domain name to Verisign had again fallen below anticipated levels, which created additional economic problems. At the same time, Tuvalu became a partner in a trial scheme to provide migrant labour for seasonal horticultural work in New Zealand. This plan could offset some of the loss of income, but it would increase Tuvalu’s dependence on remittances from migrant labour for revenues. Aid continued to play a significant role in providing infrastructure for a growing population; in February Japan commissioned a $7.5 million upgrade of Funafuti Atoll’s electric-power-supply system.

Tuvalu faced other, and more potentially serious, environmental problems: sea levels around it were rising at a rate of 2.3 cm (almost 1 in) annually, causing accelerated coastal degradation; underground water supplies were deteriorating; and the destruction of its barrier reefs by Crown of Thorns starfish was increasing. The prospect that Tuvalu’s nine atolls might be submerged by as early as 2040 had already raised questions concerning where the population might be relocated.